As more time passes and the political turmoil in the UK intensifies, the prospects of a soft Brexit are becoming dimmer. The UK’s decision to part ways from its membership with the EU is one of the most momentous and unexpected political events in the history of the EU and has affected many UK licensed entities who rely on the freedom to passport their products and services in and out of other EU jurisdictions. A freedom that, pending Brexit negotiations, can no longer be availed of. This is bound to be a big blow to licensed UK entities which rely on their income and trade coming to and from other EU Member States.
Whatever the outcome, there are guaranteed changes in the way British nationals and companies will be dealing with the EU and vice-versa post Brexit.
Malta is already hosting hundreds of businesses ranging from hedge funds to insurance distributors, fund managers, credit institutions and investment services providers, amongst others. The island’s economic success instils a sense of security and ensures that the jurisdiction maintains high regulatory standards, which in turn result in added value to Malta’s reputation as a European financial services hub. Furthermore, Malta boasts low set-up and operational costs, all the while still maintaining high EU compliance standards.
The freedom to passport products and services are not the only two freedoms which will be affected by Brexit. The freedom of movement of persons and capital will also heavily impact UK licensed entities insofar as they will no longer be able to setup up branches of their activity in other EU jurisdictions and easily second employees to work in said jurisdictions and easily travel between one branch office and another. It is envisaged that UK residents will no longer be Visa-free travellers within Europe. They will potentially also require a work permit should they wish to take up employment in any other EU jurisdiction.
As such Malta provides the ideal solution to UK companies and individuals looking for an alternative EU base. With regards to its tax regime, Malta employs the full imputation system for companies as well as a tax refund system for company shareholders who do not reside in Malta. Under the latter, companies can enjoy up to a 6/7ths refund of the tax paid on distributed profits, effectively reducing the tax paid to 5% from the standard corporate tax rate of 35%.
In addition, private high net worth individuals can avail from a number of residence and citizenship programmes including a residence programme valid for 10 years available to any UK national who chooses to take up residence in Malta.
Want to learn more about the property market in Malta? On Thursday 26 September 2019, Frank Salt Real Estate is organising a free seminar in London hosted by the Malta High Commission with the participation of John Huber and Associates, a Maltese advisory firm that specializes in tax services with special focus on tax issues related to relocating or taking up residency in Malta.